Far too many people live their lives paycheck to paycheck. They make just enough each pay to cover what is needed with very little wiggle room and no means to save money. This can often make things difficult when an emergency or unexpected expenditure occurs. This can cause bills to get behind and can create late fees and other charges that only increase this debt. Before long, their credit is ruined and they are under a mountain of debt. Fortunately, chapter 7 bankruptcy can help.
Effects of poor credit and debt
Many people have debt for credit cards, vehicle purchases and other financing needs. Once difficulties arise, these debts can become impossible to manage. Incidents, such as a job loss or illness, can create a snowball effect of debt that can become uncontrollable. This can also have serious effects on a person’s credit. Many people understand that poor credit can make it difficult to open new credit accounts. However, it can also limit a person’s ability to get a job or even rent a home.
Bankruptcy can be an option for many people. Chapter 13 bankruptcy allows a person with a steady income to restructure their debt in a manner they can more easily afford. This often requires a repayment plan to be submitted to the judge for approval. Often, this plan must pay off all debt within 3 to 5 years. For many people, this provides an opportunity to begin again and rebuild their credit. Unfortunately, this option does not benefit those with little or no income.
Chapter 7 bankruptcy is an option for those under a lot of debt without a steady job or income. In this bankruptcy, any property, outside of one’s home and car, are liquidated, or sold off. This money is then divided among the creditors in the case. After this money is dispersed, if any, the remainder of the debts are discharged. This can be an especially beneficial process for those facing such difficulties with limited income.
Bankruptcy, however, does remain on a person’s credit for several years and can have limiting effects. It is important to discuss the process, as well as its implications with an attorney. This can ensure the process is completed properly and the client understands their part in the process.